Question

Shadee Corp. expects to sell 550 sun visors in May and 320 in June. Each visor sells for $21. Shadee’s beginning and ending finished goods inventories for May are 60 and 45 units, respectively. Ending finished goods inventory for June will be 60 units.

Each visor requires a total of $3.50 in direct materials that includes an adjustable closure that the company purchases from a supplier at a cost of $2.00 each. Shadee wants to have 27 closures on hand on May 1, 21 closures on May 31, and 22 closures on June 30. Additionally, Shadee’s fixed manufacturing overhead is $1,300 per month, and variable manufacturing overhead is $1.75 per unit produced.

Required: 1. Determine Shadee's budgeted cost of closures purchased for May and June. 2. Determine Shadee's budget manufacturing overhead for May and June.

Required: 2: Determine Shadee's budget manufacturing overhead for May and June. (Do not round your intermediate values. Round your answers to 2 decimal places.)

Answer 1

1.

Production Budget - Shadee Corp
Particulars	May	June
Expected sales units	550	320
Add: ending inventory	45	60
Less: Beginning inventory	60	45
Estimated production units of visor	535	335

Budgeted Purchase of cost of closures - Shadee Corp
Particulars	May	June
Budgeted Production units	535	335
Adjustable closure per unit	1	1
Estimated consumption of Adjustable Closures	535	335
Add: ending inventory	21	22
Less: Beginning inventory	27	21
Budgeted purchase units of adjustable closures	529	336
Cost per unit of closures	$2.00	$2.00
Budgeted cost of purchases	$1,058.00	$672.00

2.

Budgeted manufacturing overhead budget - Shadee Corp
Particulars	May	June
Budgeted Production units	535	335
Variable overhead cost per unit	$1.75	$1.75
Budgeted variable overhead cost	$936.25	$586.25
Budgeted fixed overhead cost	$1,300.00	$1,300.00
Budgeted manufacturing overhead	$2,236.25	$1,886.25